The tech industry has a long history of providing solid returns to investors. Since 2019, the Nasdaq 100 technology sector is up over 135%, well above average. S&P500grew by 82%.
The innovative nature of technology continues to expand the areas where businesses can benefit from consistent demand for various hardware and software upgrades.Therefore, Warren Buffett’s holding company berkshire hathaway I dedicate at least 45% of my portfolio to tech stocks. Meanwhile, Berkshire’s portfolio had a compound annual return of nearly 20% from 1965 to 2023 and is now worth $370 billion.
In 2023, the artificial intelligence (AI) boom captivated Wall Street. Excitement about emerging markets has sent many tech stocks soaring, and growth is unlikely to slow anytime soon. Generative technologies have the potential to boost countless markets, from consumer products to cloud computing, self-driving cars, machine learning, and more.
Although the technology industry has created many billionaires over the years, there is still plenty of room for development, and the AI market itself is expected to expand at an average annual growth rate of 37% until 2030, reaching a size of 2 trillion. It is predicted to reach close to the dollar amount.
Here are two top tech stocks that could make you a millionaire.
1. Alphabet
Home to brands like Android, YouTube, Chrome, and many products under the Google umbrella. alphabet (GOOG -1.22%) (Google -0.95%) It has become a technology giant. The company attracts billions of users to its services and has a long history of delivering consistent returns to investors.
Over the past five years, Alphabet’s annual revenue has increased 90% to $307 billion, and its operating income has increased 135% to $84 billion. And during that period, the company’s stock price soared 146%.
Alphabet has built a profitable digital advertising business, which has become its biggest growth driver. With over 80% of the search engine market and dominance in online video sharing and smartphone operating systems, the technology company has nearly limitless advertising revenue opportunities.
Alphabet’s most recent quarter (Q4 2023) saw revenue increase more than 13% year over year, beating expectations by $1 billion. Advertising revenue for the quarter was slightly lower than expected. However, the AI-focused Google Cloud division posted a 26% increase in revenue to his $9 billion. Meanwhile, Google Cloud’s operating profit amounted to $864 million, compared to his $186 million loss in the same period last year.
The company’s gradual expansion into AI is promising as it has the potential to enhance multiple areas of its business. Alphabet could offer more efficient advertising, create a search experience similar to ChatGPT, expand its AI cloud services, and more.
Alphabet is on an exciting growth trajectory with strong positions in multiple areas of technology. Meanwhile, the company’s free cash flow reached $70 billion last year, indicating it has enough cash to invest in the business to keep up with completion.
Data by YCharts
Additionally, Alphabet trades at a discount to its competitors. This chart shows that Alphabet has the lowest forward price-to-earnings ratio (P/E) among the most prominent companies in the tech industry.
Alphabet is a tech stock with the potential to make you a billionaire over the long term, and with its lucrative advertising business, expanding role in AI, and a variety of powerful brands, it’s worth considering this month.
2. Nvidia
Nvidia (NVDA 4.00%) The company has created a number of billionaires in the last year, and its stock price has risen 235% since February 2023. But it seems like it’s early days, suggesting it’s not too late to see the chipmaker’s stock rise significantly.
Nvidia has dominated the graphics processing unit (GPU) market for years, with a significant lead over its rivals. Advanced Micro Devices and intel. The company’s dominance in the industry allowed it to immediately begin supplying hardware to countless AI-focused companies right after the AI boom began last year.
As a result, Nvidia’s revenue has skyrocketed since the beginning of 2023 due to a surge in chip sales. Revenue for the fourth quarter of 2024, which ended in January, was $22 billion, an increase of 265% from the same period last year. Meanwhile, operating profit rose 983% to nearly $14 billion. This impressive growth was primarily driven by a 409% increase in data center revenue as GPU demand soared.
In addition to increasing revenue, NVIDIA’s free cash flow increased 430% last year to more than $27 billion, significantly more than AMD’s $1 billion and Intel’s -$14 billion.
Therefore, despite the release of new GPUs from both chipmakers, Nvidia’s head start in the AI space gives it more cash to continue investing in the technology and maintain its market dominance. You may be able to move forward further with your remaining energy.
Data by YCharts
This chart shows that Nvidia’s earnings could reach $34 per share over the next two fiscal years. Multiplying this number by the company’s future P/E ratio of 32 yields a stock price of $1,094.
Given its current position, these projections would see Nvidia’s stock price rise 39% by fiscal year 2027. In addition to its dominant position in high-growth markets like AI, Nvidia has been a hot buy this month.
Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Dani Cook has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Berkshire Hathaway, and Nvidia. The Motley Fool recommends Intel and recommends the following options: Long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.